200 F INANC IAL Statements 05 Sect ion Ranhi ll Ut i l i t i es Berhad NOTES TO THE F INANC I AL STATEMENTS For the year ended 31 December 2022 19. DEFERRED TAXATION (Contd.) The components and movements of deferred tax liabilities during the financial year prior offsetting are as follows: Deferred tax liabilities Group Property plant and equipment RM’000 Convertible unsecured loan stocks RM’000 Right-of-use of assets RM’000 Operating financial asset RM’000 Others RM’000 Total RM’000 At 1 January 2021 (19,683) (200) - (136,732) (386) (157,001) Arise from acquisition of subsidiaries (Note 20) 262 - - - - 262 Recognised in profit and loss (6,294) (86) (2,110) 13,884 137 5,531 Exchange differences 322 - - - - 322 At 31 December 2021/1 January 2022 (25,393) (286) (2,110) (122,848) (249) (150,886) Arise from acquisition of subsidiaries (Note 20) - - - - (434)* (434) Recognised in profit and loss (4,867) 286 - 17,356 231 13,006 Exchange differences (67) - - - - (67) At 31 December 2022 (30,327) - (2,110) (105,492) (452) (138,381) * Arise from completion of purchase price allocation on acquisition of subsidiaries. Further details are disclosed in Notes 16 and 20 (e). Presented after appropriate offsetting as follows: Group 2022 RM’000 2021 RM’000 Deferred tax assets 47,265 65,104 Deferred tax liabilities (33,974) (28,341) 13,291 36,763 Included in the deferred tax assets of the Group is an amount of RM42,119,000 (2021: RM47,543,000) arising from the unutilised investment allowance of a subsidiary, Ranhill Powertron II Sdn. Bhd. (“RPII”). The investment allowance was approved and granted by the Ministry of Finance (“MoF”) to RPII in a letter dated 4 November 2010 and is available to be carried forward until it is utilised in full. Accordingly, the deferred tax asset has been recognised to the extent that it is probable that future taxable profit will be available against which such unutilised investment allowance can be utilised. In determining the amount of deferred tax to be recognised in relation to the unutilised investment allowance of the Group, the related subsidiary, RPII had considered its projected taxable profits up to the end of the concession period in year 2032 under the Power Purchase Agreement (“PPA”) and its terms and conditions therein. On 26 December 2018, the Finance Act 2018 introduced a 7-Year Limitation on carry forward of investment allowances. Such ruling implies that RPII can only utilise its unutilised investment allowance against any taxable profit up to year 2025, requiring a potential reversal of deferred tax asset to the statement of profit or loss and other comprehensive income of RM42,119,000 (2021: RM47,543,000). RPII, through its tax consultant, has since appealed to the Ministry of Finance (“MoF”) to allow RPII to utilise the investment allowance up to the end of the concession period in year 2032 based on terms previously granted. The appeal is currently under assessment and consideration by the MoF.
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